Jun IIR Prices to Face Pressure from Supply-Demand Imbalance
Introduction: In May, the supply-demand imbalance in China’s IIR market persisted, with market prices showing a stable-to-weak adjustment. Looking ahead to June, domestic IIR units that underwent maintenance will gradually resume operations, further increasing market supply. Meanwhile, downstream tire enterprises are entering a seasonal consumption off-season, making a significant improvement in demand for IIR unlikely. As a result, IIR market prices may continue to fluctuate weakly.
China IIR mainstream price decreased in May
In May, the temporary easing of China-U.S. tariff tensions and domestic unit maintenance provided some support to market sentiment. However, downstream enterprises showed weak purchasing interest for IIR due to the impact of the May Day holiday and pressure from new orders. The supply-demand imbalance saw limited improvement, keeping downward pressure on IIR market prices. According to SCI data, as of May 29, the market price of regular IIR 1675N in East China was RMB 15,250/mt, down RMB 400/mt from the previous month. The price of HIIR 232 in East China was RMB 16,650/mt, also down RMB/mt from the previous month.
Unit maintenance had limited drive on IIR market
In May, domestic IIR supply was partially affected by maintenance shutdowns at key producers. Shandong Chambroad Sinopoly New Material underwent a 25-day maintenance starting May 7, while Panjin Cenway New Materials began an 18-day turnaround on May 15. However, the market impact was mitigated by ample existing inventory and steady imports. Meanwhile, downstream demand remained sluggish as tire enterprises, constrained by post-holiday production adjustments and weak order intake, maintained cautious procurement. Consequently, the market saw limited price movement amid supply-demand contradictions, with traders continuing to face destocking pressure throughout the month.
Lower feedstock prices weakened cost support
In May, China’s MTBE prices exhibited a “W-shaped” trend with overall weak performance and declining mainstream price levels. By May 28, the average MTBE price in major markets stood at RMB 5,032/mt, down RMB 435/mt or 7.96% MoM. During the May Day holiday, crude oil price declines drove MTBE producers to prioritize inventory clearance through price reductions. However, post-holiday restocking and bargain-hunting temporarily improved market sentiment. Mid-month, multiple MTBE units suspended operations due to profit losses, significantly tightening supply. Simultaneously, export negotiations gained momentum, boosting domestic buying interest and supporting a price rebound. Approaching month-end, prices fluctuated narrowly at low levels amid weak supply-demand dynamics, demonstrating notable volatility.
IIR Market Price May Remain Under Pressure in June
Supply: In July, domestic supply may increase as Shandong Chambroad Sinopoly New Material’s 50kt/a unit and Panjin Cenway New Materials’s 130kt/a unit are expected to resume normal operation, exerting downward pressure on the IIR market atmosphere.
Demand: In June, excluding the impact of holidays, downstream tire enterprises will maintain stable production continuity. Most producers will advance production in a relatively stable manner, and after capacity stabilizes, the operating rate is expected to show a recovery-driven upward trend. Additionally, the recent decline in feedstock costs has improved producers’ profitability to some extent, providing adequate production incentives for some plants under feasible operating conditions. While tire operating rates may see a restorative increase, the overall upside potential remains limited, suggesting only marginal demand improvement for IIR.
Cost: In June, MTBE operating rates are expected to remain relatively low, maintaining moderately tight supply conditions. While domestic downstream demand remains steady, a significant increase in MTBE export orders is anticipated to push prices slightly higher. However, the expected price increase may be constrained by two factors: the planned startup of new domestic capacity and persistently tepid demand.
Overall, in June, some previously maintenance units in China will resume normal operation, increasing market supply. The operating rate of downstream tire enterprises may recover moderately, but the upward space is limited, and demand is difficult to improve significantly, so the market supply-demand imbalance may continue. The market price of feedstock MTBE may remain low, lending limited cost support. In June, the IIR market lacks effective drivers, and the market price may fluctuate downwards.
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